Claw Back of Privileged Documents Fails Where Defendants Had Used the Documents in Depositions, Expert Reports and in Briefs without Objection

Defendants filed a motion to compel Adaptix to re-produce documents that Adaptix had clawed back on the grounds of privilege. Adaptix had early produced the documents in several productions. The Defendants argued in the motion that even if Adaptix could demonstrate the documents are privileged, Adaptix waived the privilege because Defendants had notified Adaptix that they were relying on the documents at least nine months before Adaptix sent its clawback letter. Defendants pointed out that they had relied on information disclosed in the documents in depositions, expert reports, and briefing, all without any objection from Adaptix.

In response, Adaptix asserted that its data vendor erroneously produced the documents to Defendants without Adaptix knowledge even though they had been properly tagged as privileged. Adaptix also asserted that the documents fell within the protections of the attorney client work product doctrine because they pertained to testing that was performed for purposes of litigation at the direction of Adaptix’s attorneys. Adaptix then argued that it was only in March of 2015 that it “eventually realized the error of Defendants’ access to the documents at issue and promptly sent a letter clawing them back.”
In analyzing the waiver issue, the district court explained that before Rule 502(b) was signed into law, courts in the Fifth Circuit considered a five-factor test in determining whether disclosure of privileged information was inadvertent: (1) the reasonableness of precautions taken to prevent disclosure; (2) the amount of time taken to remedy the error; (3) the scope of discovery; (4) the extent of the disclosure; and (5) the overriding issue of fairness. Alldread v. City of Grenada, 988 F.2d 1425, 1433 (5th Cir.1993). In determining whether the inadvertent disclosure exception is satisfied under the new Rule 502(b), the Rule’s Advisory Committee Notes state Rule 502(b) “does not explicitly codify that test, because it is really a set of non-determinative guidelines that vary from case to case.” First American, 2010 WL 4975566, at *3 (quoting FED. R. EVID. 502, Advisory Committee Notes). The Advisory Committee Notes also state the “rule is flexible enough to accommodate any of those listed factors.” Id.

The district court also noted that “[i]n First American, relied upon by Defendants, the court declined to apply the five-factor analysis, not as a blanket rule, but due to the factual circumstances of the case. The court noted the five-factor test was designed primarily to cope with the ‘increasingly common problem in massive discovery where thousands or millions of documents are produced and a few privileged documents are inadvertently disclosed along with the millions of other documents,’ a problem Adaptix asserts is an issue here. First American, 2010 WL 4975566, at *4. However, approximately two years later in Zapmedia, the court applied FED. R. EVID. 502 without the five-factor test. Although the court held privilege was not waived as to documents that were clawed back two hours after a deposition, the court held the privilege had been waived as to documents clawed back one week later and also as to documents clawed back more than eight months after a deposition in which the documents had been used. 2010 WL 5140672, at *2.”

Applying this case law, the district court concluded that Adaptix had waived the privilege as to the documents it had clawed back. “Here, Adaptix produced the documents as early as April 2013. It examined the documents during Mr. Dodd’s deposition in June of 2014 and was further made aware of the disclosure in Defendants’ non-infringement expert reports in August and September of 2014. Because Adaptix did not promptly seek return of the clawed back documents, any privilege attaching to the documents has been waived. See Apex Mun. Fund v. N-Group Secs., 841 F.Supp. 1423, 1433 (S.D.Tex.1993)(‘Simply put, a one-year delay in taking any action to attempt to preserve the privilege exemplifies carelessness.’).”

The district court reached the same conclusion applying the five-factor test. “First, as the party with the burden of proof, Adaptix has not shown with evidence the privilege applies. Adaptix merely states the documents were generated as part of testing performed for preparing for the lawsuits against Defendants. Nor has Adaptix established the reasonableness of the precautions taken to prevent disclosure. There is no declaration by the vendor or anyone else to support Adaptix’s assertion it took reasonable steps to prevent disclosure of the clawed back documents. Adaptix attached a declaration by one of its lawyers to support its allegations, but the declaration merely provides that Adaptix reviewed over several hundred thousand documents during discovery; produced over nine million pages of documents during discovery; and tagged over ten thousand documents as privileged during the course of its review for these cases. Additionally, Adaptix has not shown it attempted to remedy the disclosure in an adequate amount of time. By failing to claw back its documents for months after being put on notice, Adaptix has failed to act promptly. The Court finds any privilege or work product protection that may have applied to the clawed back documents has been waived by Adaptix.”

Accordingly, the district court granted the motion to compel the re-production of the documents.

Stan Gibson, an experienced technology and IP trial lawyer, represents inventors, manufacturers, owners and others in litigation centering on complicated technology. Stan's practice is national in scope and he represents both plaintiffs and defendants and has litigated dozens of cases on behalf of his clients, taking many of them to trial. Although most cases settle, Stan's ability to take cases to trial enhances their value and drives favorable verdicts and settlements. Contact him at 310.201.3548 or SGibson@jmbm.com.

Greg Cordrey, an experienced patent litigator and former flight test engineer, represents a wide range of industries including medical device, computer, e-commerce, semiconductor, automotive, aircraft, and consumer products. He has litigated patent cases nationwide and has practiced before the Federal Circuit and the U.S. Patent and Trademark office as a registered patent attorney with experience in concurrent litigation and patent reexamination proceedings. Greg is recognized as one of the "Best Lawyers in America" in IP Law, as well as a "Super Lawyer" and "Rising Star." Contact him at 949.623.7236 or GCordrey@jmbm.com.

Rod Berman is recognized by the Daily Journal as one of the top 30 intellectual property attorneys in the State of California, and by the Los Angeles Business Journal as one of the top 100 attorneys in Los Angeles. Rod's practice focuses on patent, trademark, copyright, unfair competition and internet responsibilities and includes counseling, litigation, opinions, licensing and prosecution. In addition to being a registered patent attorney, Rod is a court-recognized expert in patent and trademark law, and has successfully argued before the Federal Circuit. Contact Rod at 310.201.3517 or RBerman@jmbm.com.

Andrew Shadoff, is a litigation associate who has assisted in prosecuting and defending patent infringement lawsuits involving mechanical devices. He has drafted successful summary judgment motions and pretrial motions in limine, and has assisted with trial and witness preparation. Contact him at 310.712.6856 or AShadoff@jmbm.com.

Joe Mellema's practice focuses on litigation in federal and state courts, including the protection and enforcement of intellectual property rights, and business and commercial disputes. He has handled patent, trademark, copyright, trade secret, unfair business practices, antitrust, and business and commercial lawsuits in all phases of litigation and arbitration. In addition to a law degree, he has dual degrees in electrical engineering and physical sciences, and was formerly a systems engineer at Raytheon Company. Contact him at 949.623.7232 or at JMellema@jmbm.com.

Rachel Capoccia

Rachel Capoccia focuses on technology-based litigation and counseling, with an emphasis on patent litigation, copyright litigation and other technology-related matters. Her legal experience is complemented by 10 years working at IBM as a software engineer before law school, during which she led a team of engineers who developed computer graphics software and computer aided design systems. She represents clients in all phases of patent infringement matters involving diverse areas of technology. Contact Rachel at 310.201.3521 or RCapoccia@jmbm.com.

Jessica Newman is a litigation associate, and a member of JMBM's Patent Litigation Group. She is involved in all aspects of litigation and has assisted in representing clients in a variety of industries with regards to patent infringement and copyright infringement issues. Contact her at 310.785.5372 or JNewman@jmbm.com.